2023-10-18 10:14:00
Aussie Soars on Hawkish RBA Minutes, USD/JPY Nears 150.00
Summary:
Robust US Retail Sales in September, up 0.7%, beating forecasts at 0.3% initially boosted the Dollar Index (USD/DXY) to 106.53, before dipping lower to finish at 106.20.
Against the Japanese Yen though, the Greenback continued to grind higher toward the 150.00 level, to 149.75 from 149.55. The Euro (EUR/USD) edged higher to 1.0575 from 1.0535 yesterday.
Hawkish RBA minutes boosted the Australian Dollar (AUD/USD) to a 0.6365 finish against 0.6297 previously. The RBA was seen as keeping the door open for a November rate hike, with the focus now on Q3’s inflation report.
Treasury bond yields rose, led by the US 10-year Treasury rate, which closed at 4.84% against 4.61% previously. Other global bond rates also climbed, limiting the Greenback’s advance.
Germany’s 10-year Bund yield climbed to 2.88% from 2.73%. The UK 10-year Gilt yield finished at 4.51% (4.38%). Australia’s 10-year Bond yield rallied 8 basis points to 4.54%.
The British Pound (GBP/USD) climbed to 1.2182 from 1.2120 despite a fall in the UK Average Earnings Index to 8.1% from 8.5%. Questions remained whether the Bank of England was done raising rates.
Against the Asian and Emerging Market Currencies, the Dollar closed mixed. The USD/CNH pair (Dollar-Offshore Chinese Yuan) rallied 7.3250 from 7.3130. USD/SGD (Dollar-Singapore Dollar) eased to 1.3680 (1.3700) while USD/THB (Dollar-Thai Baht) rallied to 36.35 from 36.25.
Other economic data released yesterday saw the Eurozone ZEW Economic Sentiment Index rise to 2.3% from -8.0% previously. Germany’s ZEW Economic Sentiment Index soared to -1.1 from -11.4 previously.
US Headline September Core Retail Sales climbed to 0.6% (m/m), beating estimates at 0.2%. August’s Core Sales were revised higher to 0.8% from 0.6% initially. US Industrial Production rose to 0.3%, up against forecasts at 0.0%. US Capacity Utilization was also up, to 79.7% from 79.5% previously.
On the Lookout:
Asian markets today will be in focus with the release of China’s trifecta of economic data. Annual Industrial Production in the world’s second largest economy is forecast to ease to 4.3% from 4.5% previously – ACY Finlogix.
China’s Annual Retail Sales is expected to climb to 4.9% from 4.6% previously -ACY Finlogix. China’s September Fixed Asset Investment is forecast unchanged at 3.2% - ACY Finlogix. China also releases it September Unemployment Rate (f/c 5.2% from 5.2% - ACY Finlogix) and Annual Chinese Foreign Direct Investment (f/c -6.8% from -5.1% - ACY Finlogix).
The UK kicks off Europe with its UK September Inflation Rate (y/y f/c 6.6% from 6.7%; m/m f/c 0.5% from 0.1% - ACY Finlogix), UK September Core Inflation Rate (y/y f/c 6% from 6.2%; m/m f/c 0.5% from 0.1% - ACY Finlogix).
The Eurozone releases its September Final Inflation Rate (m/m f/c 0.3% from 0.5%; y/y f/c 4.3% from 5.2% - ACY Finlogix) and Eurozone September Final Core Inflation Rate (y/y f/c 4.3% from 5.2% - ACY Finlogix).
The US rounds up today’s data releases with its September Housing Starts (f/c 1.38M from 1.283M – ACY Finlogix) and US Preliminary September Building Permits (1.45M from 1.541M – ACY Finlogix). Federal Reserve Heads Waller, Williams, Harker, and Cook are scheduled to speak at various events.
Trading Perspective:
The US Dollar finished mostly lower against the major currencies despite a rise in US bond yields. Other global bond rates were also higher, limiting any significant Greenback gains.
Sentiment turned to risk-on which also kept the US Dollar’s topside limited. At the close of trade in New York, the Greenback finished lower, at 106.20, following its initial rally.
Today, expect more position adjustments in FX ahead of speeches from several Federal Reserve officials (see above). Volatility will stay elevated.
(Source: Finlogix.com)
Happy Wednesday and trading all.
This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
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